Using budgets Flashcards
What is a limiting factor?
The factor that prevents the original planned production from being carried out.
Examples include available resources of direct materials or direct labour.
What is the product life cycle?
The stages that a product goes through from development to ultimate decline.
What is sensitivity analysis?
The use of modelling to assess the impact on budgets of various different volumes, prices and costs.
What are fixed budgets?
A set of budgets based on a single set of assumptions about sales levels; often used for planning purposes.
What are flexible budgets?
A series of sets of budgets based on different sales levels; used for anticipating different outcomes or monitoring actual costs.
What is a rolling budget?
Budgets that are continually extended into the future as time goes on.
What is feedback in budgeting?
Information obtained and reported after comparing the budgeted and actual results; used to determine necessary control action if results show significant differences.
What is feedforward in budgeting?
Information about the current performance of an organisation and its environment used in budgeting for the future.
What is exception reporting?
The practice of reporting only the information which is significant, often involving variances outside the agreed tolerance level.
What is management by exception?
The use of exception reporting to help concentrate management efforts on significant issues.
